Pennsylvania court orders Vision Property Management to return 285 homes to misled tenants

Daniel Ramos was renting the Kensington home he shared with his wife and young children when its landlord lost the property due to mortgage foreclosure. The house was sold at a sheriff’s sale in 2012 and ended up in the hands of a subsidiary of national company Vision Property Management.

The following year, Ramos and his son-in-law signed a contract with the new owner to make a $4,000 down payment and monthly payments with the promise that they would own the house in seven years. Ramos didn’t have good credit and saw the “lease-to-own” deal as a chance to own the house where his family had made their lives.

But after falling behind on his payments, the company told him in 2019 that he had to leave, even though he had found what he needed.

“I always felt like I was going to own the property,” Ramos said. But after speaking with a lawyer, he discovered the truth: he had been misled about his lease-to-own agreement. Even though he had made all of his monthly payments for seven consecutive years, he said, “I was never going to be able to own the property.” The total monthly payments were well below the purchase price, and he wouldn’t have been able to come up with the remaining tens of thousands of dollars all at once.

These kinds of misleading deals, Ramos said, “hurt people who are trying to do better for their families.”

» READ MORE: Six questions to ask about a lease option to buy a home

This month, an Allegheny County judge ordered Vision Property Management, one of the nation’s largest home rental companies, and its affiliates to transfer deeds to 285 Pennsylvania homes to residents, including Ramos, who had been misled into thinking they would own. This includes nine homes in Delaware County, one in Montgomery County and 19 in Philadelphia. Contracts should be considered fully paid.

This is the latest development in a lawsuit the Pennsylvania Attorney General’s office filed against the company and its subsidiaries in 2019, claiming they misled more than 650 Pennsylvania residents into entering into rental agreements. with options to buy dilapidated and foreclosed houses for which they were responsible. fixation. The company has faced similar lawsuits in New Jersey, Ohio and Wisconsin. Lawyers for the companies did not respond to a request for comment on Monday.

“The idea of ​​rent-to-own agreements in general is quite common,” said Michael Froehlich, attorney general of the homeownership and consumer rights unit at Community Legal Services of Philadelphia. “It’s especially prevalent in Kensington and other low-income areas of Philadelphia, where many people see it as a way to become a homeowner if their credit is bad or there’s some other issue that’s preventing them from qualify for a mortgage.”

READ MORE: In Kensington, a rent-to-own deal that wasn’t so sweet

“The American dream of homeownership is dying,” he added, “and if someone is turned down for a mortgage and they really want to be a homeowner, they may think that a lease-to-own arrangement is his best bet.”

The deal Ramos signed gave the impression that he would become the owner after seven years. But six years later, he was only halfway to paying off the house. According to the fine print, that seven-year promise didn’t mean much. An affiliate of Vision Property Management had purchased Ramos’ home for $15,000. Over the years, Ramos has paid around $39,500 including the deposit, he said. The total purchase price in the lease-purchase agreement was $72,000.

“Like many of them, this contract was designed to fail,” Froehlich said. Community Legal Services “always tells clients it’s a bad idea. Don’t do them.

After the term of the contract expires and the lease ends, residents must pay a balance of tens of thousands of dollars for the purchase price. If they can’t pay, the landlord can evict them in court and start the cycle over with someone else, Froehlich said.

Unlike typical landlord-tenant relationships, residents of lease-purchase agreements are responsible for home repairs and maintenance. Residents make payments but do not accumulate equity and are not entitled to homeowner protections. The landlord can evict residents in case of late payment.

Ramos was indeed supposed to be the owner, but “they were the ones in control”, he said.

“It’s really a lose-lose situation for people,” Froehlich said, “because it’s the worst part of being a landlord and the worst part of being a renter at the same time.”

On Froehlich’s recommendation in light of the Attorney General’s lawsuit, Ramos stopped paying rent in 2019. A year ago, the Allegheny County Common Pleas Court ordered Vision Property Management and its affiliated companies to temporarily stop collecting rent.

Pennsylvania sued the company and its affiliates in October 2019 after seeing news reports, hearing from legal aid attorneys, and seeing lawsuits by other state attorneys general. Under “lease-to-own” contracts, residents were responsible for costly repairs needed to make homes habitable, which is against the law, according to the attorney general’s office. The agreements did not provide property rights in a way residents could afford, and residents who fell behind on rent risked immediate eviction.

» READ MORE: Lean on rental-purchase home sales

“Pennsylvanians who have been exploited by Vision Property Management and its affiliates’ deceptive ‘rent-to-own’ schemes will finally be homeowners,” Attorney General Josh Shapiro said in a statement. “My office will work tirelessly to implement the court order as quickly as possible and seek fair compensation for anyone who was defrauded and forced to leave their homes.”

Hundreds of people who entered into illegal contracts with the companies no longer live in the homes and were not included in this month’s court order.

Ramos doesn’t know when his house will truly belong to his family. The companies have asked the courts to suspend the registration of deeds by the Attorney General’s office.

“I don’t get my hopes up, you know,” Ramos said.